Shell profit plunges

By Tom Bergin

LONDON (Reuters) - Oil majors Royal Dutch Shelland Eni dashed hopes of an imminent turnaround for the industry, as sluggish economic recovery weighs on energy demand and prices, contributing to a big drop in profits.

Shell, Europe's largest oil company by market value, said on Thursday it was cutting 5,000 jobs, after net profit dropped 73 percent in the third quarter to $2.99 billion (1.8 billion pounds).

Italy's Eni said it was cutting its production forecast for the year due to lower gas demand, and project deferrals aimed at saving cash, as it unveiled a 58 percent drop in net profit.

The results and pessimistic outlook contrast with London-based BP third-quarter earnings which smashed forecasts by 50 percent, lifting sector shares on Tuesday on hopes the industry would weather the economic slump better than expected.

Shell and Eni's cautious comments echo worries in recent days about the fragility of the recovery, after weak U.S. new homes sales data, which also weighed on crude markets.

"We see some indications that energy demand and pricing are improving, but the outlook remains very uncertain, and we are not expecting a quick recovery," Shell Chief Executive Peter Voser said in a statement.

Analysts at Citigroup said Shell's results painted a "disappointing picture" and added Eni's comments would boost worries about its ability to grow production.

Shell's London-listed A shares traded down 4.5 percent at 1,825.5 pence at 11:09 a.m. British time on Thursday, while Eni's shares dropped 2.6 percent to 17.1 euros against a 1.0 percent drop in the DJ Stoxx European oil and gas sector index